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Investment Returns Vs. Salary Bonuses

I have been tracking my investment returns since 2003 and realised that for the last 15 years or so, the investment returns comprising capital gains (losses), dividends and interest did not exceed each year’s total bonuses from earned employment income.

What this means is that my savings and growth of investible savings is built mostly from earned income rather than investment income. Investment income comprises a relatively small portion of net savings for the year. Building up investments to basically earn a return that can keep up with inflation helps maintain the portfolio value of my nest egg over and above CPF savings. From the data, I realise the nest egg grows more from savings than the returns from investments.

I realise even more starkly how earned income is still the key retirement savings driver. Keeping myself healthy and fit to continue to work until 62 67 really should be the name of the game given that I find my job reasonable satisfying given the remuneration for the workload and stress levels. Hence, I need to focus even more on regular exercise, balanced diet and stress management to keep myself going and to have a decent quality of life in terms of health.

It’s bonus season and in the past, I would allow myself to spend at most 10% of my bonus. After living within my means for so long, I no longer feel the urge to spend as buyer’s remorse and the fact I don’t like shopping helps me to just buy what I need plus the occasional “luxury”. I guess at this stage of my life I have come to the understanding that the happiness from material things dissipate very fast but spending on loved ones and meaningful experiences last longer. Memories if well kept can last for decades and one can still be happy thinking and reminiscing on the happy times (and money) spent on loved ones years in the future.

Be well and prosper.

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